Hudson Resources (TSXV: HUD) has signed definitive agreements with its existing lenders, Cordiant Capital Inc. and Romeo Fund, to restructure the outstanding debt on the White Mountain anorthosite mine in Greenland and to provide an injection of capital to ensure the stability of the mine going forward.
Pursuant to the agreements, approximately $13.7 million of the existing $42 million debt owed to the lenders will be converted into preferred shares of the company’s subsidiary, Hudson Greenland, thereby reducing its interest payments substantially.
The maturity date of the loan facilities will be extended by three years, while the first principal payment payable date will be pushed out by two years. The interest rate on a previously announced $10 million backstop facility is also reduced.
The conversion of existing debt into preferred shares of Hudson Greenland will result in the lenders holding approximately 69% of the Hudson business unit. Hudson has the option to buy back its interest from the lenders for 200% of the subscription price.
Concurrent with the debt restructuring, Hudson Greenland will issue a convertible debenture in the amount of $10 million to the lenders, with the proceeds to be used for working capital. Should the debenture be converted in full, the lenders’ ownership interest in Hudson Greenland would increase to approximately 79%.
“Our lenders are now our partners and our interests are aligned in growing the mine into a successful business producing green products in numerous revenue streams. Importantly, we have retained the right to regain full ownership of Hudson Greenland in the future,” president Jim Cambon said in a media release.
Meanwhile, the Greenland government has given permission for Hudson to remobilize its team back to the project site despite covid-19 travel restrictions, with activities now under way to move the mine from care and maintenance to full operations.
Blasting had already resumed and the plant would start up in the next two weeks, the company said.
Aside from its ownership in the White Mountain anorthosite mine through Hudson Greenland, Hudson also owns the Sarfartoq rare earth element (REE) and niobium/tantalum exploration license. The company expects to commence activities on the Sarfartoq license in the coming weeks with an initial focus on the high-grade niobium project.